Emerging Mobile Markets Part 1: A New World Order in Mobile Advertising?

In 2001, when economist Jim O’Neill coined the term BRIC in his paper, it signalled the emergence of new possibilities for political and economic ecosystem. Close to two decades later, we are witnessing a similar shift in balance for mobile advertisers towards these countries.

Since the dawn of mobile advertising in 2012, the developed economies of North America and Europe have been the key focus for app advertisers, dominated by a strong shift from desktop to mobile that evolved into mature mobile markets for global advertisers. While these regions still continue to hold the lion’s share of the worldwide mobile ad spending, in the last two years emerging developing economies of the BRIC nations have caught up. According to a recent report by App Annie on the emerging app economy, the BRIC countries together posted approximately 80% year-on-year growth in combined iOS and Google Play downloads in 2015. In addition to the BRIC countries, the ad tech industry is also witnessing dynamic developments in the app economy in the APAC regions of Indonesia and Vietnam, as well in the Middle East and Africa.

The growth and penetration of smartphones in these regions has been a crucial factor for this boom. Gartner’s report on the market for smartphone sales shows that in Q3 2015 compared to Q3 2014, smartphone sales in emerging markets rose 18.4%, while sales in mature markets saw growth of just 8%. India, for instance, overtook the U.S. in 2016 to be the world’s second-largest smartphone market by users. For Latin America, especially, the last two years have seen dramatic growth in mobile engagement, second only to sub-Saharan Africa in terms of overall new smartphone activations. A research report by Ericsson also suggests that by 2021, smartphone subscriptions will double, and regions of Latin America and APAC will lead that expansion.

Ericsson Mobility Report

The proliferation of the smartphone market is also due to the availability of affordable devices that has led to higher penetration in these regions. This increased competition, has, in parallel, helped for people to access mobile internet data at lower costs, leading to better connectivity and creating mobile-first users for whom the smartphone becomes a first-screen. These regions are also tied together by the increasing social media usage, dominated by their young population size. Such mobile-first users present a unique opportunity for the app advertisers. Looking at the mobile ad spending by country (chart below), while U.S. is still the leader of the pack, the projected year-on-year numbers are encouraging for the emerging economies.

Emerging economies are creating vast opportunities for app advertisers, opening up channels for growth and monetization. What does this mean for the app advertisers? Where should they focus their resources and efforts for user acquisition?

China, as an app market, has already shown matured growth in the last couple of years. The app economies of Brazil, India and Russia, on the other hand, are still on an upward curve of growth along with Indonesia, the other rising giant in APAC. In this series, over the coming weeks, we will focus on the aforementioned 4 key regions to throw spotlight the main trends shaping the app economy. For each region, we will elaborate on the main trends in the mobile market, get insights into the acquisition costs, as well as, dive deep into the key growth app verticals. Through this series, we hope our readers will be able to put the trends into perspective to better understand the prospects of growth and challenges, as well as, decode what these trends hold for the future of app advertising both in these regions and globally.

Stay tuned!